Using two independent datasets with 640 diverse adolescents in 9 schools, this study explored the concurrent and longitudinal relationship between adolescent friendship racial composition and ethnic/racial identity (ERI), considering the role of school racial diversity as a moderator. For concurrent associations, adolescents who reported more same-race friendships and attended a more racially diverse school reported higher levels of ERI exploration across all years. Adolescents who reported more friendship racial diversity and attended less racially diverse schools reported higher levels of ERI exploration in the 10th grade only. For longitudinal associations, greater friendship racial diversity in the 9th grade was associated with a faster increase in ERI exploration in the following years, and racial homophily (the tendency toward same-race peers) was less present among adolescents attending racially diverse schools. Overall, proximal (friendships), distal (school), and temporal (grade) contexts were drivers of adolescent ERI development.